Government Performance and Results Act Strategic Planning Document 2008-2011

The Board of Governors of the Federal Reserve System (the Board) is one component of the nation's central bank. See appendix 1 for a complete description of the Federal Reserve System (the System).
Mission

The mission of the Board is to foster the stability, integrity, and efficiency of the nation's monetary, financial, and payment systems to promote optimal macroeconomic performance.
Values

The following values of the Board guide its organizational decisions and its employees' actions.

    * Public interest. In its actions and policies, the Board seeks to promote the public interest. It is accountable and responsive to the general public, the U.S. government, and the financial community.
    * Integrity. The Board adheres to the highest standards of integrity in its dealings with the public, the financial community, and its employees.
    * Excellence. The conduct of monetary policy, responsibility for bank supervision, and maintenance of the payment system demand high-quality analysis, high performance standards, and a secure, robust infrastructure. The pursuit of excellence drives the Board's policies concerning recruitment, selection, and retention policies for Board employees.
    * Efficiency and effectiveness. In carrying out its functions, the Board is continually aware that its operations are supported primarily by public funds, and it recognizes its obligation to manage resources efficiently and effectively.
    * Independence of views. The Board values the diversity of its employees; input from a variety of sources; and the independent professional judgment that is fostered by the System's highly valued regional structure. It relies on strong teamwork to mold independent viewpoints into coherent, effective policies.

Goals

The Board has six primary goals with interrelated and mutually reinforcing elements:

   1. Conduct monetary policy that promotes the achievement of the statutory objectives of maximum employment and stable prices
   2. Promote a safe, sound, competitive, and accessible banking system and stable financial markets
   3. Develop regulations, policies, and programs designed to inform and protect consumers, to enforce federal consumer protection laws, to strengthen market competition, and to promote access to banking services in historically underserved markets
   4. Provide high-quality professional oversight of Reserve Banks
   5. Foster the integrity, efficiency, and accessibility of U.S. payment and settlement systems
   6. Foster the integrity, efficiency, and effectiveness of Board programs

Achievements of Goals and Objectives

The Board employs a comprehensive planning, budget formulation, and budget execution process to ensure the identification, prioritization, and accomplishment of goals and objectives. Planning is coordinated throughout the System by the Strategic Framework (discussed below). Monetary policy work is coordinated through the structure of the Federal Open Market Committee. Supervision and regulation planning is coordinated by the Board's Division of Banking Supervision and Regulation and Division of Consumer and Community Affairs in collaboration with the Strategic Plan Steering Committee, which is composed of senior Board officials and the officer-in-charge of supervision at each Reserve Bank. The Board's budget and accounting systems are closely linked to ensure that expenses can be compared with plans. This process integrates strategic planning, allocation of resources among competing priorities, performance measurement, and ongoing review of the need for existing programs.
Background

In the face of accelerating change in the economy and banking system brought about by numerous factors--including globalization, technology, bank consolidation, and the evolution of payment systems--the Federal Reserve recognized the need for a more comprehensive planning framework. In 1995, a System Strategic Planning Coordinating Group, consisting of Board members, Reserve Bank presidents, and senior managers representing the full range of the Federal Reserve's activities was appointed. This group developed an "umbrella" strategic framework under which the Board, the Reserve Banks, and the product offices develop their own more detailed plans and decision documents. This framework was the basis for the Board's first Government Performance and Results Act (GPRA) Planning Document, setting forth the mission, values, and goals of the System. The framework was updated in 2003 and is incorporated in this strategic planning document. Key assumptions and external and internal factors that could affect the achievement of those goals, and associated objectives, were reviewed and updated in 2007 as part of the biennial planning process and are discussed in the following section.

The Board's strategic planning effort recognizes key differences between government and private-sector strategic planning and measurement of results. Measures of costs and revenue derived from prices determined in competitive markets can be used in private planning; the results of that planning are reflected in the ability of the private entity to prosper over time. The government does not have direct competition in certain areas and has a monopoly in others (monetary policy, for example), and establishing a proxy for costs and prices is extraordinarily difficult. Moreover, the results are judged relative to public policy objectives embodied in law, which often are not readily measurable. The Board tries to effectively accomplish its mission while creating the efficiencies that come from strategic planning. The Board's central planning objective is oriented toward achieving effectiveness and efficiency specific to the functions it serves.

In monetary policy, for example, the Federal Reserve exerts only partial and indirect influence on the economy. Because the Federal Reserve's performance therefore cannot be measured solely in terms of economic outcomes, the appropriate judgment must be whether our research technology is successful in analyzing problems and changes in the economy. In the area of bank supervision, the mission of contributing to a viable, competitive, efficient banking system demands a sharing of risks between the central bank and private banks, which serve the crucial function of managing the risk of investing in illiquid loans. As a regulator, the Federal Reserve's job is to ensure that the financial institutions it regulates are allowed to take on appropriate degrees of risk in fulfilling their function in the economy, but not to the point that they impose risks on the financial system in general. Measures of our success would include whether the banking system is performing its functions and whether systemic risk is appropriately contained during periods of challenge to individual institutions or groups of institutions.
Planning Considerations
Strategic Planning and the Budgeting Process

To sharpen the focus on strategic priorities, the Board's budget and planning process was restructured in 1997 to lengthen the planning and budgeting horizons and to increase Board member involvement in the setting of priorities. A four-year planning horizon and a two-year budget were adopted.

In developing plans and budgets under the strategic framework, the director of each Board division or office updates divisionwide plans, coordinating efforts with other division directors and Reserve Banks as necessary. These plans and resulting resource requests are reviewed by the Committee on Board Affairs (composed of two or three Board members), which then makes recommendations to the full Board. A Staff Planning Group (SPG) and the Board's Planning and Budget Section provide support to the committee during the planning process by identifying issues and providing analysis of the budget options.
Planning Background

For this 2008-11 strategic plan, the SPG reviewed the planning materials submitted by the Board's divisions and offices and identified the following common themes having Boardwide impact over the planning period:

    * Projects that will occur during the planning period, including the payment of interest on reserves
    * Legislative and executive mandates for a number of activities, including the provision of physical and information security and the support of electronic government initiatives
    * The need to attract and retain highly productive and qualified staff
    * The difficulty of providing sufficient adequate office space